VAT

What is VAT ?

 

Get in touch with us at syed.faisal@sk.financial or call us at +971 54 330 4320

Introduction of VAT in UAE

Get in touch with us at syed.faisal@sk.financial or call us at +971 54 330 4320

Key Definitions

    • VAT – A tax imposed on the import and supply of Goods and Services at each stage of production and distribution, including the Deemed Supply.
    • Goods: Physical property that can be supplied including real estate, water, and all forms of energy as specified in the Executive Regulation of this Decree-Law.
    • Services: Anything that can be supplied other than Goods.
    • Import: The arrival of Goods from abroad into the State or receipt of Services from outside the State.
    • Export: Goods departing the State or the provision of Services to a Person whose Place of Establishment or Fixed Establishment is outside the State.
    • Taxable Person: Any Person registered or obligated to register for Tax purposes under this Decree-Law
    • Person: A natural or legal person.

Tax Registration Number (TRN): A unique number issued by the Authority for each Person registered for Tax purposes.

  • Consideration: All that is received or expected to be received for the supply of Goods or Services, whether in money or other acceptable forms of payment.
  • Place of Establishment: The place where a Business is legally established in a country pursuant to the decision of its establishment, or in which significant management decisions are taken and central management functions are conducted.
  • Fixed Establishment: Any fixed place of business, other than the Place of Establishment, in which the Person conducts his business regularly or permanently and where sufficient human and technology resources exist to enable the Person to supply or acquire Goods or Services, including the Person’s branches.
  • Place of Residence: The place where a Person has a Place of Establishment or Fixed Establishment, in accordance with the provisions of this Decree-Law.
  • Related Parties: Two or more Persons who not separated on the economic, financial or regulatory level, where one can control the others either by Law, or through the acquisition of shares or voting rights.

 

Get in touch with us at syed.faisal@sk.financial or call us at +971 54 330 4320

How to register for VAT ?

 

Get in touch with us at syed.faisal@sk.financial or call us at +971 54 330 4320

Tax Return filing & Payment

Penalties

Get in touch with us at syed.faisal@sk.financial or call us at +971 54 330 4320

Coverage of VAT

 

Get in touch with us at syed.faisal@sk.financial or call us at +971 54 330 4320

Registration

 

Get in touch with us at syed.faisal@sk.financial or call us at +971 54 330 4320

Tax Scope & Rate of VAT

  • Standard rated : By default all supply of goods and services and imports in the UAE (and the GCC) will be considered as subject to Vat @ 5% known as standard rated supplies.
  • Zero Rated :
    • Exports of goods and services to outside the GCC;
    • International transportation, and related supplies;
    • Supplies of certain sea, air and land means of transportation (such as aircrafts and ships);
    • Certain investment grade precious metals (e.g. gold, silver, of 99% purity);
    • Newly constructed residential properties, that are supplied for the first time within 3 years of their construction ;
    • Supply of certain education services, and supply of relevant goods and services;
    • Supply of certain Healthcare services, and supply of relevant goods and services.
  • Exempt Supplies : Financial Services (Fee based services taxable and Margin based services Exempt), Residential properties, Bare land andLocal passenger transport.

 

Get in touch with us at syed.faisal@sk.financial or call us at +971 54 330 4320

VAT Recovery/Refund

  • Standard Rated Supplies : VAT is charged and VAT Credit is available
  • Zero Rated Supplies : VAT is NOT charged, However VAT Credit is available
  • Exempt Supplies : VAT is NOT charged and VAT Credit is NOT available

 

 

Get in touch with us at syed.faisal@sk.financial or call us at +971 54 330 4320

VAT grouping

Businesses that satisfy certain requirements covered under the Legislation (such as being resident in the UAE and being related/associated parties) will be able to register as a VAT group. For some businesses, VAT grouping will be a useful tool that would simplify accounting for VAT.

 

 

Get in touch with us at syed.faisal@sk.financial or call us at +971 54 330 4320

Date of Supply

Transitional Rule : Ex: customer X buys a car on 30th Nov 2017 Possession of car given on and after 1stJan 2018 then the transaction is liable to VAT. After 01/01/2018 , Tax shall be calculated on the date of supply of Goods or Services, which shall be earlier of any of the following dates:

    1. The date on which Goods were transferred, if such transfer was under the supervision of the supplier.
    2. The date on which the Recipient of Goods took possession of the Goods, if the transfer was not supervised by the supplier
    3. Where goods are supplied with assembly and installation, the date on which the assembly or installation of the Goods was completed.
    4. The date on which the Goods are imported under the Customs Legislation.
    5. The date on which the Recipient of Goods accepted the supply, or a date no later than (12) months after the date on which the Goods were transferred or placed under the Recipient of Goods disposal, if the supply was made on a returnable basis.
    6. The date on which the Services were completed.
    7. The date of receipt of payment or the date on which the Tax Invoice was issued.

 

Get in touch with us at syed.faisal@sk.financial or call us at +971 54 330 4320

Value of Supply

  • It will be consideration either in Money or in Kind received by the supplier after deducting the VAT
  • If the consideration is partially in Money then the value will be determined as per the market value exclusive of VAT
  • Import value of goods consist of the custom value pursuant to custom legislation less the tax

 

Get in touch with us at syed.faisal@sk.financial or call us at +971 54 330 4320

Place of Supply

This will help determine whether a supply is made with in the UAE or outside the UAE. Supplies made within the UAE are subject to UAE Vat Laws. For supply of GOODS, the place of supply will be the location of goods where the supply takes place.

For supply of SERVICES, the place of supply will be where the supplier is established.

Special rules will be applied to certain categories of supplies i.e. cross border supplies, water and energy etc.

 

Get in touch with us at syed.faisal@sk.financial or call us at +971 54 330 4320

Bad-debt relief

If any business have charged and paid Vat to FTA but the customer has not paid and treated as Bad-debts the Vat law includes special rules for enables them to make a claim for Bad-debt relief under specific conditions.

 

 

Get in touch with us at syed.faisal@sk.financial or call us at +971 54 330 4320

Preparation for Companies

  • Companies have to analysis the impact of Vat on their Businesses so that Tax Credit and Tax payable can be identified and paid;
  • Accounting software’s has to be upgraded in accordance with Vat law like Modification of invoices (tax amount should come in AED, tax invoice should be mentioned on the top of invoice);
  • Tax invoice should contain TRN No., date of sale, Emirates of Sale, Clear description, Quantity of goods, Amount of sale and tax amount in AED
  • Vat payable and Vat receivable account to be created in CL/CA;
  • Record keeping in respect of all business transactions is a must (tax invoices, Debit/Credit note, Import/Export reports, Record of goods and services provided for free or for private use, Zero rated or Vat Exempt supplies and purchases)

 

Get in touch with us at syed.faisal@sk.financial or call us at +971 54 330 4320

How can we help you

  • Analyze the effect of VAT on your Business;
  • Help in Registering your Business with FTA and get TRN;
  • Help in preparing your Books as per VAT guidelines;
  • Timely filing of VAT Returns;
  • Claiming of Refunds.

 

Get in touch with us at syed.faisal@sk.financial or call us at +971 54 330 4320